Establishing a charitable trust

A charitable trust allows a donor to make a substantial gift while benefitting family or others during the donor’s lifetime. Donors who set up a trust receive an immediate income tax deduction for the gift. The trust serves as a benefit to the living beneficiary and will ultimately live on to serve and preserve the mission of the North Star Fund.

Charitable Remainder Trusts

  • You receive an immediate income tax deduction for the gift, which you can use in the year of the gift and, if necessary, for five additional years.
  • You avoid all the capital gains taxes an appreciated stock or real estate if you use these assets to establish the trust.
  • You avoid all the capital gains taxes on any trades, sales, or transfers of assets within the trust.
  • You receive an income for the rest of your life (or the lives of other people as well) based on the value of the assets in the trust.
  • If you act as your own trustee, you retain full control over the investment decisions for the assets in the trust.
  • You have the satisfaction of knowing that you will benefit your family now and North Star Fund later.

Charitable Lead Trust with North Star Fund as the income beneficiary

  • You can make a significant series of gifts over a period of years to North Star Fund for whatever purpose you wish.
  • You are assured that at the end of the trust term (period of time determined by you), the asset in the trust will go to your heirs with little or no transfer tax, no matter how much it has appreciated in value.

Charitable Remainder Trust (A gift that produces a lifetime income)
Helen owns highly appreciated stock, but she feels that she cannot give it outright because she needs to invest for retirement income. By putting $100,000 worth of stock into a charitable remainder trust, she avoids all the capital gains tax, receives a tax deduction in the year she sets up the trust, and maintains an income of at least $5,000 per year for the rest of her life with a good possibility of increased income as the trust grows in value.  

Charitable Lead Trust (A gift that provides income to a charity for a period of years and then returns the asset to the donor’s family without any tax)
Adam owns an office building that he built some years ago for $1M. Renting regularly to doctors’ offices, Adam knows the building (now worth $5M) produces a steady income and is likely to appreciate still further in the future. Adam would like to give the building, eventually, to his two children. By placing the building in a charitable lead trust, Adam can make an annual gift to North Star Fund of $300,000 for a set period of years, while, at the same time he can transfer the building to his children with no gift or estate tax, no matter how much the building will be worth in the future.

A trust is a legal document, and it is best to consult your attorney for assistance with drafting a trust document.

If you would like to discuss this kind of gift, or if you would like to see a confidential example designed specifically for you, please call 212-620-9110 or email Kofo Anifalaje, Development Officer at Kofo@northstarfund.org.